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    New

    Technologiesfor PublicFinancial

    ManagementMay 2007ICGFM

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    Preface

    Slides have been updated with the scriptused for ICGFM (see notes pages)

    Additional information sources slides havebeen added at the end of the presentation

    For discussion, clarification, or expansionof concepts or desire to have custompresentation provided via WebX or in-

    person, e-mail me [email protected]

    mailto:[email protected]:[email protected]
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    governmentIntegrated Financial Information Management

    Systems (IFMIS)

    of tomorrow

    How computer technology trends

    today are defining

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    Agenda

    Market and technology forcesaffecting Public FinancialManagement (PFM)

    Technology and PFM reform 10 key technology and market

    trends

    Conclusions

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    ICT makes a countrys economy more efficient

    and globally competitive, improves health and

    education services,and creates new sources of income and

    employment for poor people.

    World Bank,April 2006

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    IFMIS in Government Today

    Typical Solutions Custom-developed or bespoke

    Enterprise Resource Planning (ERP)

    Specialized government IFMIS applications

    Typical DifficultiesInflexibility to adapt to reform and

    decentralization

    Sustainability by government ICT staff

    Integration between budget execution andaccounting

    Integration between front-office and back-office

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    Technology in Context

    Technology

    IFMIS

    Public Financial Management

    Modernization and Reform

    Government Objectives

    T h l V d

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    Technology VendorViewpoint

    Technology

    IFMIS

    PublicFinancialManagement

    ModernizationandReform

    GovernmentObjectives

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    Government IFMIS of tomorrow

    The four computer and market

    technology forces of today that aredefining

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    1. Consolidation

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    2. Disintegration

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    3. Innovation

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    4. Integration

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    10 Technology TrendsConsolidation

    1. Enterprise software consolidation2. Open source software3. Commoditization of the software stack

    Disintegration4. Decentralization

    5. Business process management6. Software as a service (SaaS) and shared services

    Innovation7. The web as a platform - Web 2.08. Wireless government

    Integration9. Corporate Performance Management (&

    Government Performance Management)10. Service Oriented Architectures (SOA)

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    with government and development trends

    Not all technology and market

    trends are consistent

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    ERP systems have become bloated

    understructures that have becometoo expensive to maintain.

    Bruce Richardson, AMR

    ResearchAugust 2006

    1. Market consolidation

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    What is Enterprise Software?

    Many acronyms: ERP (Enterprise Resource Planning)

    SCM (Supply Chain Management)

    CRM (Customer Relationship

    Management) CM (Content Management)

    CPM (Corporate PerformanceManagement)

    BPM (Business Process Management)

    and many others

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    Enterprise Software Market

    ERP CRMSCM

    BPM

    CPM

    CM

    Si b lSi b l

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    Microsoft

    SAP

    Infor

    Oracle

    Sage

    LawsonEpicor

    Chinadotcom

    Siebel

    Retek

    PeopleSoft

    JDEdwards

    Vantive

    Triversity

    SSAGlobal

    Baan

    MarcamE-piphany

    Ironside

    Mapics

    Lilly

    GeacJDA

    Extensity

    Comshare

    Datastream

    FRX

    GreatPlains

    Navision

    Damgaard

    AxaptaSoloman

    Scala

    Intentia

    Ross

    Pivotal

    Accpac

    Best

    Mas 90/200

    Peachtree

    Timerline

    Siebel

    Retek

    PeopleSoft

    JDEdwards

    Vantive

    Triversity

    SSAGlobal

    Baan

    MarcamE-piphany

    Ironside

    Mapics

    Lilly

    GeacJDA

    Extensity

    Comshare

    Datastream

    FRX

    GreatPlains

    Navision

    Damgaard

    AxaptaSoloman

    Scala

    Intentia

    Ross

    Pivotal

    Accpac

    Best

    Mas 90/200

    Peachtree

    Timerline

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    Drivers for Consolidation

    Lack of organicgrowth Shareholders want companies to invest in

    more growth

    Perception thatbig = winning

    Maintenance business model

    Buy customers

    Own customers:barriers to entry

    Lack of value for upgrading

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    Current Situation

    Survival of the fittest? Pressureto enter new horizontal andvertical markets

    New stack wars

    SME market Emerging markets

    Overlapping technology portfolio

    Consolidators attempting economies ofscale

    Customer satisfaction?

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    The growth of free, open-source softwarepresents developing countries with an

    opportunity to escape from technological

    dependence on developedcountries, but also a challenge to

    build up local expertise

    Dr. Mike Reed, UNU International

    Institute for Software

    Technology March 2006

    2. Open Source Software

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    Open Source in GovernmentAfrica South Africa

    Asia and the Pacific Japan, China, Korea, Singapore, Thailand, Taiwan, India, Israel

    Australia - Department of Veterans Affairs, Bureau of Meteorology,Taxation Office, Department of Health and Centrelink, South AustraliaGovernment, Australian Capital Territory, NSW Department ofAgriculture, Northern Territory Department of Education

    Europe European Union (EU) - Belgium, Bulgaria, Denmark, Estonia, France,

    Germany, Portugal, Spain, UKNon-EU countries - Ukraine

    Cities - City of Munich

    Latin America Brazil, Peru, Argentina, Columbia, Mexico, Venezuela

    North America

    (USA)

    Federal Government - DOD, NSA, NASA, NIST, FEMA, USAID, DOL,National Weather Service, FAA

    State Government - California, Oregon, Massachusetts, Hawaii,Delaware, Texas, Rhode Island, Utah

    Municipal Government - City of Austin, Dallam County Texas

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    Drivers for Open Source

    Software commoditization - lack ofincremental benefits in commercialinfrastructure software

    Government self-reliance reduce

    national technological dependence

    Cost and choice - cost for license

    compliance

    Future proofing

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    Current Situation

    Rapid uptake in emerging countries Proven performance and reliability

    Infrastructure middleware success

    Java EE, Apache, MySQL, Linux,JBoss, Tomcat, OpenOffice

    Some assembly required

    Usability issues

    Market volatility

    Not established in business applications

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    Middleware the layer of softwareused to connect two applications

    or to connect an application to the network is approaching acommodity state.

    Patrick Carey and Bernard Gleason,

    Vision 2010Future of

    Business Software

    Applications August 2005

    3. Commoditization of the software

    stack

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    Software Stack

    BusinessApplications

    Middleware

    Database

    OperatingSystem

    Server

    Network

    StorageManagement

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    Drivers for Commoditization

    1. Standards= Ability to interchange middleware

    Lower cost from vendors

    2. Market maturation

    more and more functionality inmiddleware driving costs down

    Application vendors want to bemiddleware neutral

    Customers do not want to be locked-in

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    Current Situation

    Accelerated Commoditization Price pressure on middleware

    Middleware standards are being set bygovernments (USA: F.E.A.)

    Many governments developed opensource middleware policies

    On the Internet, no one knows what

    middleware you are running

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    including political devolution,

    de-concentration,delegation, and transfer

    to non-governmental organizations,

    promotes democracy andgood governance by providing aninstitutional framework to bring

    decision-making closer to the peopleShabir Cheema United Nations Global

    Forum for Reinventing GovernmentNovember 2006

    4. De-centralization,

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    Devolution

    DelegationDe-concentration

    Divestment

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    Budgets

    Ministry 1

    MunicipalGovt

    MunicipalGovt

    Virements

    Information

    Virements

    Information

    Virements

    Information

    MunicipalGovt

    ProvincialGovt

    National

    Government

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    National

    Government

    ProvincialGovt

    Ministry 1

    MunicipalGovt

    MunicipalGovt

    MunicipalGovt

    Reporting

    Outturn Expenditure

    Information

    Outturn Expenditure

    Information

    Outturn Expenditure

    Information

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    Drivers for De-centralization

    Administrative Decentralization Improve government efficiency andeffectiveness = improve outcomes

    Large % of government budgets deployed

    locally Local and cultural autonomy

    Fiscal Decentralization

    Improves participation = more stablecountries

    Reduce waste and corruption

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    Current Situation

    Conflictswith computing trend tointegration (centralization)

    Clear trend: devolution on everycontinent

    Local capacity and sustainability issues

    Difficulties in extending governance with

    existing solutions

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    Success with BPM also requires aculture of real-time management ..

    and may need a separateprocess center of excellence.

    Gartner GroupFebruary 2006

    5. Business Process Management

    What is Business Process

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    What is Business ProcessManagement (BPM)?

    Workflow

    Integration

    Design andDevelopment

    BusinessActivity

    Monitoring

    Orchestration

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    Industry Drivers for BPM

    Maximizing efficiency - workflow andintegration enables greater automation

    Difficulties in adaptingERP aftercustomization

    Best practices from the private sector?

    Horizontal companies hope BPM willreduce customization costs

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    Current Situation of BPM

    Established in compliance solutions Leveraged in process e-government

    Not established in government IFMIS

    Well established standards Performance/functionality compromise

    No market leading vendor

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    SaaS benefits are crystallizing,

    but chaos still abounds

    Robert Bois,Aberdeen GroupJune 2006

    6. Software as a Service (SaaS)

    What is Software as a

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    What is Software as aService (SaaS)?

    Applications are hosted externally: e.g.Salesforce

    Typically priced on a subscription basis

    Typically provides minimal customization

    Business model for SOHO, small to largeorganizations

    Evolution of ASP(Application Server

    Provider), but typically serving a purpose-built application

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    Drivers for SaaS High cost to maintain complex software and

    infrastructure

    Licenses

    Upgrades

    Networks Databases

    SaaS supports fast growth

    Attractive for smaller organizations

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    Current Situation

    Increasing as a % of the market (from 0to..)

    Uneven adoption: high in customerrelationship management

    Rarely used in government back-officeapplicationswhy?

    Similar technology used for sharedservices, yet

    E-Procurement ideal application Emergence of appliances

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    No matter how you brand the hype,get ready for a quantum leap in the way

    the Web works and more importantly how it works for you and your business.

    Wayne Gomes, Rich Internet

    Group November 2005

    7. The Web as a Platform - Web 2.0

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    What is Web 2.0? An umbrella term for second wave of internet

    innovation Web as platform + diversity of platforms Mash-ups + syndication Social software + community

    Open source + rapid development Rich web interfaces Distributed documentation & data

    Companies: SixApart, Flickr, Pandora,Pageflakes, FaceBook, YouTube

    Underlying technologies: blogs, wikis, AJAX,RSS, REST, SOAP, VOIP, podcasting, Skype,BitTorrent, Wikipedia

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    Web 2.0 is the network as platform,spanning all connected devices

    creating network effects through an

    "architecture of participation,"and going beyond the page metaphor

    of Web 1.0 to deliver rich user experiences.

    Tim OReilly, OReilly Media

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    Drivers for Web 2.0

    The Web as a Platform using the internet as anAPI for new applications

    Radical decentralization distributed data, reused,remixed, (re)-aggregated, and (re)-syndicated

    Self-service and participation

    Infrastructure is available

    The Network Effect

    The Long Tail

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    Web 2.0 in Government

    Norway has the first Web 2.0 GovernmenteNorway 2009 initiative

    US Government Ready for Web 2.0

    Blogs the govsphere is growing fast

    RSS feeds proliferating rapidly among USgovernment agencies

    Wikis adopted by UK, US government for

    collaborative telework

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    Current Situation

    Consumer market driving businessapplications

    Corporations adopting bloggingtechnology (Microsoft Channel 9)

    Superior collaborative capabilities

    Upset commercial vendor status-quo

    Security concerns in government

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    New wireless technology is resulting ininnovative business models

    and holds the promise of connecting poor users,

    extending competition to all market segments,and accelerating development of broadband

    infrastructure and access.

    World BankApril 2006

    8. Wireless Government

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    What is Wireless Government?

    Light e-government using mobile telephonetechnology

    Mobile telephone as kiosk

    Citizens and Businesses

    Finding government services Notifications and alerts

    Civil Service

    Requisitions and receiving

    Approvals Time & Attendance

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    Drivers for Wireless Government

    Proven voice and text technologies Mobile telephone is the tool of choice forsmall transactions

    Growth in emerging countries

    Overcoming the digital divide

    Citizen and civil servant usable andinexpensive

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    Current Situation

    Early adoption in government Exposing IFMIS capabilities via wirelessdevices is difficult

    Remains differences among devices

    Most e-government needs computersand the Internet

    Practical work on life events

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    Agencies are addressing goals of decreasingadministrative burdens, lowering costs, enabling

    better informed decision making, and ensuringtmeliness in responding to sector needs.

    Aberdeen GroupMarch 2004

    9. Corporate Performance and

    Government Performance Management

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    Drivers for Corporate

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    pPerformance Management

    Too much information

    Business Intelligence tools such asreporting are not prescriptive

    Not all indicators are relevant

    Financial information is after the factyou cannot change the past

    Many non-integrated Business

    Intelligence (BI) tools

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    Corporate Performance Objectives

    Key Performance Indicators (KPIs) and

    scorecards are simple to understand

    KPIs measure in progress

    Aggregates measurements from many

    sources Utilizes capabilities of many tools

    Provides clarity for what is important

    Government Performance

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    ManagementBusiness

    Bottom Line is clear:profitability

    Measured on quarterlyprofitability

    Bottom Line isfinancial

    Budget is a guideline

    Simple financial

    measurements:revenue, expenditures,cost centres

    Government

    Government mandatesrequire many objectives

    Measured on long-termoutcomes

    Bottom Line isoutcomes

    Budget is the law

    Difficult financial

    measurements:objectives, funds,projects

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    Performance and Budget

    Budget

    Execution

    Budget

    Planning

    Government

    Objectives

    Scenario

    Planning

    Budget

    Forecasting

    Performance

    Monitoring

    Budget

    Review

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    Inputs, Outputs, Outcomes Objective

    Governmentdevelopment goal

    Input

    The money in thebudget

    Output

    The money spent

    The items purchased

    Outcomes

    Results for the nationalinterest

    To improve education and

    literacy rates in remoteregions

    $M earmarked for thispurpose

    $M spent in 5 regions

    2 schools built, 40additional teachers hired,250 computers and 1,500books purchased

    Year 1: literacy testsincreased by 2%. Year 2:by 5%. Year 3: by 10%

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    Current Situation

    Mixed Capacity issues

    Improvements in MTEF

    Remains output focused

    Better results in projects yet

    Commercial performance managementsoftware not budget centric

    10 S i O i t d A hit t (SOA)

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    SOA will make todays ERP systems

    look like yesterdays mainframe apps.

    Bruce Richardson, AMR

    ResearchAugust 2006

    10. Service-Oriented Architecture (SOA)

    O

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    SOA Drivers

    Promise of re-use: write once, use manytimes

    Component-based architecturespromise of assemblingapplications from

    parts Mix programming language, operating

    system and middleware

    Pick best-of-breedapplications

    W b S i

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    Web Services

    registerdiscover

    bind

    C Si i

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    Current Situation

    Proven practical in Web 2.0

    Business software:

    Early & emerging

    Rapid momentum

    Revolutionizing enterprise software

    Therefore Technical issues being solved

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    Conclusions

    I t th IFMIS f T

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    Impact on the IFMIS of Tomorrow

    Immediate Impact:

    Consolidation Business Process Management Software as a Service

    Long-Term Trend:

    Performance Management

    Major Change to IFMIS:

    De-centralization Open SourceCommoditization of Software Stack ServiceOriented Architectures

    Innovation Opportunities:

    Web 2.0 Wireless Government

    M d l

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    Modular

    d M d l

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    and Modular

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    modular, de-centralized & integrated

    non-monolithic & multiple vendorswired & wireless

    commodity & innovative

    The Government IFMIS of

    tomorrow will be:

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    core

    IFMIS decentralize

    extend

    measure

    Citi C t i

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    Citizen Centric

    citizen

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    more choices,

    better choices,proven choices,

    sustainable choices.

    Governments will have:

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    [email protected]

    Conceptual Analysis

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    Conceptual Analysis

    Best tools and authors to analyzecomplex trends in high technology:

    Geoffrey Moore on technology adoption

    Clay Christensen on innovation

    Marshall McLuhan on medium(enhancement, reversal, retrieval,obsolesce)

    Gartner Group on technology hypecycle

    Recommended Links

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    Recommended Links The Future of Software:

    http://www.forrester.com/Teleconference/Previous/Overview/1,5158,1411,00.html

    The Future of Government Communications Networks:http://www.dts.ca.gov/news_events/ppt/Gartner_JoeSkorupa.ppt

    Innovation Does Matter:http://fr.sun.com/sunnews/events/2006/may/symposium/pdf/paeinier_forrester.pdf

    Vision 2010: http://www-03.ibm.com/industries/education/doc/content/bin/IBM_BCS_White_Paper_Vision_2010_Business_Applications.pdf

    Information and communications for development 2006 : globaltrends and policies: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB

    /2006/04/20/000012009_20060420105118/Rendered/PDF/35924

    0PAPER0In101OFFICIAL0USE0ONLY1.pdf Web 2.0 in Business:http://www.mckinseyquarterly.com/article_abstract.aspx?ar=1913&l2=13&l3=11&srid=9&gp=1

    Recommended Links

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